The following article is cross-posted from Alliance magazine blog. Based out of the UK, Alliance magazine is the leading global magazine on philanthropy and social investment.
“Lean” foundations—those with few or no staff—make a significant contribution to American philanthropy but their size conditions how they operate according to the latest annual benchmarking report from Exponent Philanthropy (EP), which supports small foundations.
Based on a survey of 330 of its 2,000 members, EP’s 2018 Foundation Operations and Management Report, provides a total figure of $4 billion in grants made. Many had payout rates—the proportion of assets paid out in grants—well above the U.S. mandatory 5 percent in 2017.
Those with the larger assets among the sample (over $100 million), had the highest percentage at almost 11 percent of assets, though the smallest ones—those with less than $5 million in assets—also paid out an average of 7.73 percent.
They are also likely to provide more than financial support to their grantee organizations. For one thing, 79 percent made general operating grants in 2017 and 69 percent of them made capacity building grants.
In other respects, their size influences what they do and how they do it. They are fairly strong on collaboration, for instance, with 69 percent saying they collaborate or at least meet regularly with other funders and 52 percent saying they share findings with other grantmakers.
They are also increasingly using technology to streamline operations in areas such as accounting and due diligence.
On the other hand, what they don’t do so often is fund internationally or engage in impact investing. Sixty-six percent of their grant dollars were spent locally and only 6 percent was spent internationally. Only fifteen percent made impact investments.
One area where lean foundations don’t appear to differ too markedly from their larger counterparts is in preferred causes: education topped the list at 76 percent, followed by human services at 61 percent and health at 55 percent.